Class 4 National Insurance contributions

Who has to pay Class 4?

Class 4 contributions are only payable if:

  • a self-employed person has trading profits chargeable to income tax under Cases 1 & 11 of Schedule D (subsequently Self Assessment cases), and
  • those profits exceed the lower (profit) limit, and
  • exception does not apply

Class 4 National Insurance contributions are paid in addition to the flat rate of Class 2 National Insurance contributions. These contributions are profit related, so unlike Class 2 not all self-employed people will have to pay them.

Class 4 National Insurance contributions are also payable by employed people who are treated as self employed for National Insurance contributions purposes.

You are automatically exempted from paying Class 4 contributions if you:

  • have reached or are over state pension age at the beginning of the tax year of assessment
  • are treated for income tax purposes as not resident in the UK
  • are a trustee, executor or administrator (but only in some cases)
  • are a sleeping partner (supplies capital and takes a share of profits but takes no active part in running trade)
  • are a diver or diving supervisor (exemption only applies to certain divers/supervisors).

If you are under 16 at the start of the tax year, you can apply for special exception from liability to pay Class 4 contributions. You only need to apply once, as your application will cover all tax years up to and including the year of your 16th birthday. To apply for exception, complete form CA2835U obtainable from

HM Revenue and Customs
National Insurance Contributions Office
Deferment Services
Benton Park View
Newcastle upon Tyne
NE98 1ZZ

What is the Class 4 rate?

The Class 4 National Insurance contributions you need to pay for any tax year are based on your taxable profits for that year, which you will show on your annual Self-Assessment tax return. Latest Class 4 rates. The accounting year is normally the period of 12 months covered by your accounts. It can start on any day and therefore may not align with the income tax year. There are notes with the tax return to help you calculate your profits for the tax year. Although you have to work out your profits, you don’t have to work out your Class 4 contributions if you don’t want to.

If you want us to work out your contributions, you need to ensure your tax return reaches us by 30 September following the year of assessment. If you want to work it out yourself, you need to make sure your tax return reaches us by 31 January following the year of assessment.

Note: The calculation of profits exceeding the Lower Profit Limit for Class 4 is cumulative and is based on trading profits from all sources which count for tax purposes. That is to say, there is one Lower Profit Limit and one Upper Profit Limit irrespective of how many sources of profit there may be.

Can I apply to defer payment Class 4 National Insurance contributions?

If you have substantial Class 1 liability, in addition to self-employed liabilities, you can apply for a deferment of your Class 2 and Class 4 liabilities. This will avoid paying contributions in excess of the maximum amount payable and thereby removes the need for you to apply for a refund.

How is Class 4 National Insurance contributions collected

You pay your Class 4 contributions when you pay your income tax, unless you have been granted deferment of your Class 4 contributions. Payment is normally made in three instalments. HM Revenue & Customs will write to you to let you know when your payment is due.

Newly self-employed

If you are just starting up in business and want help in understanding any of this information, our Business Support Teams are available to provide face-to-face assistance. You can contact them online or by phoning the Newly Self Employed Helpline on 08459 154515.

Do Class 4 contribution count towards benefit?

Class 4 National Insurance contributions do not count towards any state benefits.

A list of Frequently Asked Questions is available should you require them.